Pension Planning

Jack_Swan

I'm looking to retire in 3 years (55). I have a personal pension, fund ,should be around £200k by intended retirement age. I'm looking to obtain an income of £1500 net per month, so current annuity rates should give me around 50% of my target. I have £120k in bld society but also both cash & S&S ISA's valued around £70k (allowances taken up in full to date). No mortgage or other large debts.

I'm trying to plan up to age 66, when the state pension will kick in.

My wife has her own company pension (35yrs service) and significant savings, so she would be able to live comfortably without relying on my income.

Any suggestions as to how I could use the building society moneys to make up the shortfall required to provide the additional £7.5k income?

FatherAbraham

Jack_Swan wrote: »

Any suggestions as to how I could use the building society moneys to make up the shortfall required to provide the additional £7.5k income?

Withdraw £7.5k per year for ten years.

Warmest regards,
FA

gadgetmind

Jack_Swan wrote: »

current annuity rates should give me around 50% of my target.

An annuity at age 55 doesn't make much sense.

I'd suggest -
1) Use drawdown as you'll get a 20% boost over flat annuity straight off.
2) Take max 25% PCLS and add to your unwrapped holdings.
3) Leave your S&S ISAs alone and even keep adding to them for as long as you can.
4) Use your "unwrapped" cash to boost income until state pension age.
5) Do keep some cash buffer but see how it goes before deciding when to stop funding ISAs.

Hopefully, you'll hit SP age with drawdown pot still doing well, S&S ISAs boosted, and a cash buffer left. When SP kicks in, your drawdown shouldn't mean you're hitting 20% tax and you can use S&S ISA income as you see fit.

Jack_Swan

Thanks for the advice. Not really considered drawdown but that sounds an attractive option.

jamesd

Jack_Swan wrote: »

Not really considered drawdown but that sounds an attractive option.

You might find the recent discussions at Pension calculation help to get me to 25k pa of interest.

You shouldn't do it for more than 5-10% of your money but there are Venture Capital Trusts like Northern that expect to pay about 8-9% tax free after allowing for the effect of the 30% tax relief on purchase. Not guaranteed but not bad either. Just know that these are quite high risk compared to standard investments, which is why 5-10% is the sensible maximum for most people - and 5% is more typically specified as the maximum.

VCT tax relief is 30% of the amount invested but no more than the actual income tax paid in the year of investment. If you sell within five years you have to repay the relief.

The initial easy bit at 55 is to take the maximum tax free lump sum and the maximum permitted amount from drawdown, even if you do not spend all of the amount being drawn. That's because the amount is an annual use it or lose it limit and you can just move any unspent money into other investments. Beyond that, have a read of the other thread for thoughts about risk management and income projections and such.